I hope you get everything you want this holiday season and, most importantly, I hope you have time to spend with your family. I love waiting for my kids to wake up on Christmas morning to come out of their rooms so I can videotape (gosh I’m old, there’s no tape anymore) them in those first moments of Christmas morning – how can I not be of good cheer anticipating that?
I have something I can give you for the holidays as well. Not peace on Earth but perhaps peace of mind heading into the New Year – a way to help insure some future prosperity with a few inflation-fighting stock picks that can brighten up your portfolio, which also can be used to help balance your home's budget against unexpected cost increases.
We haven't had much inflation recently but the Fed is probably done easing and, if the economy is doing anything to justify the stock market's enthusiasm, then pricing pressure may be right around the corner as well. If not, we can still pick solid stocks with sensible option spreads that will give us both leverage and protection that can perform well – even if the underlying position isn't boosted by inflation.
This isn’t an options seminar or one about risk or leverage – these are just a few practical ideas you can use to hedge against inflation as it may affect your everyday life using basic industry ETFs and some simple hedging strategies to give you an opportunity to stay ahead of the markets if they keep going higher.
As you can see from the chart above, we haven't actually had much inflation in the last few years, which is why we haven't felt the need for Secret Santa Hedges since 2017 but, because we practice our strategy of "Being the House – NOT the Gambler", we don't ASSUME that next year will be like the last so, going forward, I like the following hedges: